Industry Trends – August 2009

What makes the difference between a successful originator and someone who is getting out of the business in 2009?  In our humble opinion it probably has a lot to do with an old saying that “all markets are local.”  It’s never been more true in the reverse mortgage industry, as the combination of changes to lending limits, principal limits, and eligible property types among other things is creating an intensely varied marketplace for originations.  Originators that saw boom years in one locale and customer base in past years are now struggling for growth or even shrinking, while areas that previously had little activity are suddenly booming.

This has been clear for several months as we look at the Industry Trends updates, and this month is no exception.  We’ve used California, and Orange County in particular, in recent months to drive this point home, but it’s also true in other places as well.

  • Illinois overall is up 32% over last year, with Cook County up 35% (65% of IL volume) and Chicago up 44% (65% of Cook County volume).  But even within Chicago, it’s a short 7 mile drive (as Google Maps indicates) from zip code 60628 (up 52%) to 60620 (down 1%).  Given how concentrated the volume is in Illinois, it obviously makes sense to focus on Chicago – but given these numbers it’s clear your success can be determined just as much by where in Chicago you choose to focus.
  • Florida is down 30%, with Miami-Dade County down 32% (24% of FL volume) and Miami down 32% (59% of Miami-Dade County volume).  Just outside of Miami, zip code 33012 (down 32%) is 16 miles from 33175 (up 4%).  Florida is a bigger state with higher volumes and more dispersed reverse mortgage activity than Chicago, but again we find how critical it is to target your efforts appropriately.

Both of these examples are trailing indicators since we’re talking about volume that has already happened.  We’re not saying Chicago (or a specific Chicago zip code) is a better place to focus your origination efforts than Florida, or vice versa.  But at the risk of tooting our own horn, we’ll take a stand to say that this type of information should be in front of your sales and marketing decision makers on a regular basis, and you should regularly look at your origination results in the context of the rest of the market.

This business is hard enough these days without the frustration of wondering if your campaign failed because potential customers aren’t buying rather than an outdated marketing/sales message.  Click on the link below for the rest of the report and give us a call to see how our information can help you originate more loans in 2010.

Industry Trends - July 2009